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Delta to Limit Seating Capacity in 2016

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Delta Air Lines promises to limit growth to increase the bottom line in 2016, according to a company presentation.

Delta Air Lines is planning on putting a limit to seating capacity in the next year as part of an overall plan to increase profitability. Bloomberg reports the legacy air carrier announced the plan for 2016 at a company presentation.

Officials for the airline say their plans limits growth to between zero and two percent in the next year, proving a focus on services in the United States. The reduction of available seats will allow the airline to maintain competitive pricing while holding back concerns that fares will be undermined by an overall industry surplus.

Furthermore, the airline anticipates they will be able to reclaim some revenue through dropping fuel prices. The Atlanta-based carrier projects jet fuel will cost $1.45 per gallon next year, allowing Delta to save over $3 billion in fuel costs. According to Investor’s Business Daily, fuel costs account for up to one-third of an airline’s costs.

While Delta is limiting seats available to flyers, the airline will also reduce service in key marketplaces where they are competing with the “Middle East Three.” Although the airline anticipates growing in the United States and serving North America and the United Kingdom, Delta will reduce overall service to the Middle East, Brazil, and Japan.

Although the Middle East has been shrinking marketplace for Delta and fellow American legacy carriers, the move to reduce service to Japan is a new announcement from the carrier. One year ago, Anderson outlined a plan to increase Delta’s presence in Seattle, using the airport as a gateway to Asia.

In addition to saving money through limited growth and reduced fuel costs, the airline will also begin paying cash taxes in two years. The airline told Bloomberg a reorganization of their transatlantic business will reduce their overall tax burden.

[Photo: Delta Air Lines]

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8 Comments
S
Sabai January 1, 2016

Good luck redeeming your SkyPesos

C
CDKing December 31, 2015

I bet they all collude to pull back seats so they can jack up the price. STOP THE MERGERS.

A
AAJetMan December 18, 2015

doesn't Delta own a refinery?

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pdsales December 18, 2015

This is known as telegraphing your intentions to competition. It would be strictly illegal for Delta, American, and United to sit in a smoke filled room and agree on how many seats will be sold in 2016. But it is completely legal for Delta to announce to the world its intentions and monitor to see if competition follows suit. With the implied but unexpressed threat that if American and United don't follow suit that Delta might change its mind.

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BJM December 18, 2015

Key word "projects" The Atlanta-based carrier projects jet fuel will cost $1.45 per gallon next year,...